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Advice & More July 2014

Where Will Granny Live?

By Teresa Ambord

As more generations of families consolidate under one roof, the government in some parts of the country is getting involved with some tax incentives, at least for the senior set. A study by Pew Research showed about 40 percent of counties in Florida current offer what is known as a “granny flat” exemption.

It’s an uncomfortable conversation. Will Mom and Dad have enough money to meet their financial needs for the remainder of their lives? What if they can’t live alone but cannot afford the cost of an assisted living facility or nursing home? Even if they can afford it, a long-term care facility isn’t always the answer. What then?

It’s great that most of us can expect to live longer. But it might mean you have to make room for Granny. Or if you are the elderly parent and you need a new living arrangement, are you comfortable with the idea of moving in with your kids? Or having them move in with you?

 

Long-Term Care

Nursing homes and assisted living facilities are booming business, popping up everywhere. Depending on the medical needs of your parents and the resources they have, a long-term care facility could be a wonderful place. Assisted living facilities are, in many cases, like tiny apartments, with a lot of social interaction for those who want it, and privacy for those who don’t.

My aunt lived in one, and she enjoyed weekly visits to the beauty parlor on the premises, music programs, games, classes, church services. And a shuttle took her to medical appointments and shopping. It was a great life while she was healthy enough to participate. Later, health required that she moved to a nursing home, which was also nicely managed. However, both were enormously expensive. According to a 2013 survey by Genworth, the average cost of an assisted living facility is $3,450 per month. Depending on the state you live in, a nursing home can cost $6,000 to $8,000 per month. For most of us, that’s not doable.

You’ve heard the saying, “necessity is the mother of invention.” Thanks to that necessity, alternative ways to care for our elderly relatives are cropping up.

 

Alternatives to Long-Term Care

  • The Granny Pod

    One alternative is casually called the granny pod, but the official name is MedCottage. MedCottages are the brainchild of Kenneth J. Dupin, a minister from Fairfax, Virginia. After traveling abroad he noticed that in other countries, the aging population is not considered a problem, as it often is here. “One of the greatest fears we have when we age is being isolated from our families. But I didn’t see that abroad. In fact, I saw people almost celebrating age,” Dupin told reporters.

    To provide an alternative to a long-term care facility, he developed the MedCottage. This is a small unit which allows the resident to maintain his or her independence, yet live on the same premises with family or close friends.

    A MedCottage is actually connected to the main house, for power and water, and possibly an easy access walkway. It’s about the size of a large master bedroom (12 feet by 24 feet), with a bathroom and kitchenette. These cottages have features such as technology to monitor vital signs, rubberized floors which are designed to cushion residents against harmful falls. Other features are filtered air, safety handles and bars, and a “path” to the bathroom lights up at night when stepped on. They also are wired with cameras for monitoring the resident in case of a fall, but only 12 inches from the floor (so mostly what is seen are feet and ankles, allowing the resident privacy).

    The interest in these cottages is high, and the manufacturer is flooded with calls. But the problem is, zoning laws in many places create barriers to putting in a granny pod. Currently only about half of the states allow these dwellings. However, Dupin said several more states including New York are considering legislation which would allow granny pods.

    MedCottages are not cheap. To purchase one costs about $85,000, and to have it installed at your home will run another $40,000. But compared to the cost of a few years in a long-term care facility, it’s a bargain.

    Of course, for those who need round-the-clock medical personnel available, a MedCottage is not the answer. The makers of the cottages say they don’t expect to replace nursing homes. The need for elder care is great enough that both are needed.

  • PALS
    Another company located in Connecticut creates tiny prefab units which do not have the medical technology of a MedCottage (although they can, upon request). Naturally, that makes them less expensive. These units are called PALS, short for Practical Assisted Living Structures. The easy-to-set-up units are 20 feet by 14 feet, and the cost begins at $67,000. They can also be leased for as low as $1,700.

    Like MedCottages, zoning is an issue. So if you’re interested, contact the builder (877-771-7257) to see what is permitted.

  • Then There is the Granny Flat Exemption

    As more generations of families consolidate under one roof, the government in some parts of the country is getting involved with some tax incentives, at least for the senior set. A study by Pew Research showed about 40 percent of counties in Florida current offer what is known as a “granny flat” exemption. But what is the tax break for? It helps defray the cost of making your home a place where elderly relatives can live comfortably and safely, rather than forcing them to move into a long-term care facility. It is renewable every year while the senior lives in the home. There are penalties for homeowners who fudge on the eligibility for this exemption by providing falsified information (age, residency, or the purpose of the renovations). The penalties range from fines to prison time or both.

  • If Your House is Crowded and Grandma Needs to Move In

    About 23 million Americans are currently caring for elderly parents while they also have their own adult kids at home. If that’s you, you are part of the growing “sandwich generation.” A trend that is popular in some areas is the “tiny house.” Some are as small as 100 square feet. They are built on wheels, have a loft-style bedroom, a minimal kitchen, a “lounging area,” and a sort of a bathroom. The toilet might be compost. The size might be okay for a senior, but naturally any house which has a loft bedroom accessible only by a ladder probably won’t work for your 90-year-old mother-in-law. But if you have a teenager or an adult child living in your home, you can free up space by moving that kid into his or her own digs… a tiny house.

    If you build it yourself, a tiny house – which generally requires no permits and is small enough to fit in your backyard – may cost as little as $10,000. If you have someone build it, possibly $50,000. And once your child is out on his or her own, you’ve still got a guest house or an office space.

    Tiny houses may not be allowed in your area so you’ll need to check with the local authorities. There’s a lot of information about tiny houses, and interesting pictures at tinyhouseblog.com.

 

Teresa Ambord is a former accountant and Enrolled Agent with the IRS. Now she writes full time from her home, mostly for business, and about family when the inspiration strikes.

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